Here we go…10-year government bond yields just dropped below zero.

Does that mean that euro monetary policy conditions are “ultra easy”? Nope certainly not – it is rather the opposite.

Lets once again quote from Milton Friedman’s 1998-article about Japan Reviving Japan:

Initially, higher monetary growth would reduce short-term interest rates even further. As the economy revives, however, interest rates would start to rise. That is the standard pattern and explains why it is so misleading to judge monetary policy by interest rates. Low interest rates are generally a sign that money has been tight, as in Japan; high interest rates, that money has been easy.

The story is the same – monetary policy is TIGHT and is becoming tighter as the demand for money increases faster than the supply of money.